Cost-benefit analysis was utilized to evaluate the economic outcome of regionalized neonatal care in the state of Rhode Island, with specific reference to newborns weighing less than 1,500 g at birth. Two time periods consisting of two calendar years each, were analyzed: 1974 to 1975 (initiation of perinatal regionalization) and 1979 to 1980 (regionalization established). The neonatal mortality for infants weighing between 501 and 1,500 g decreased significantly between the two time periods. Neurodevelopmental morbidity was unchanged. The costs per survivor (hospital charges plus estimated costs of long-term care of handicapped survivors) were consistent over the time periods studied. The estimated benefits per survivor increased between the time periods, although this increase was not statistically significant. Benefits outweighed costs in both study periods. When one compares the economic data of 1974 to 1975 with that of 1979 to 1980, the increase ìn the absolute number of normal survivors since the establishment of regionalized neonatal care has resulted in benefits surpassing costs by $2 million (a greater than twofold increase). Regionalized neonatal care in the state of Rhode Island has had a positive economic outcome.

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